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The morning started the same as any other.
Set my coffee maker, took the dog outside, booted up the computer, sat down, and started scouring the news.
Except, when I tell you how close I was to having to go out and buy entirely new equipment, you might not believe me.
I'm serious - if I had played one fewer game of spin the bottle in high school, I'm not sure I would have had the strength to stop a full-on spit take of my coffee at what I read...
Direct from an analyst at Citigroup came the following:
The current sentiment in this market is much more dangerous than anything going on with any index, ticker, or ETF.
Except I'm here to tell you not only is this recent narrative blame game not helping anything, it's flying directly in the face of the truth.
"This isn't the banks' fault. It's yours and your silly little feelings."
I mean, just think about the implications of that statement and how absolutely bat-S crazy they are.
Unfortunately, not everyone is really thinking critically about this. Far more are just blindly accepting these statements as truth.
In case you were wondering why we were seeing the financial sectors get a little bit of strength on the markets today, this is your answer.
Now, seeing the market be driven by sentiment is nothing new. The sentiment is a perpetual force in day-to-day activity.
But this is something different altogether. This is the market and analysts attempting to rationalize the banking failure we saw earlier this month by putting all types of labels on it.
But it's not just the banking failure being rationalized here. By saying that we're not in a banking crisis, they've more or less given the green light to traders to start rationalizing the "hope trade."
"If the sky isn't falling, that means the elevator could be going up, right? Right?"
Woah buddy, pump the brakes.
So, you're probably wondering how I know our current situation is different from a "sentiment contagion."
Well, take a look at this headline...
In the above CNBC piece, Mark Williams, a former Federal Reserve examiner, said "the deal was getting stale." Ultimately, the bidding came down to First Citizens and Valley National Bancorp.
Let me translate "sweeten the terms" for you: Nobody wanted this piece of crap.
Now, if this were just as easy as a bank going under with no risk of contagion in the broader financial sector, this deal would have gotten done without any sweetening.
The company would have gone in, looked at the books, and badda bing, badda boom, "here's what we'll pay."
It shouldn't require the Fed to come in to sweeten the pot. This should be a business decision.
Instead, it's just one example of a countless number in the current market, and the Fed is trying to stop the dam from breaking by plugging a couple holes with their thumb and index finger.
So, the biggest fallout from all of this is -…
About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Penny Hawk. He also contributes to Money Morning as the Quant Analysis Specialist.
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